Today the IG dollar DCM hosted 3 issuers across 7 tranches totaling $9.45b. The SSA space featured 4 issuers and 6 tranches for $7.50b bringing the all-in IG day totals to 7 issuers, 13 tranches and $16.95b. Clearly the mega deal of the day belongs to The Goldman Sachs Group, Inc. that issued a $7b three-part Senior Unsecured Global Notes transaction for which Mischler served as an active Co-Manager on the 21nc20 fixed-to-floating tranche due 10/31/2038. That deal and more specifically that tranche is today’s Deal-of-the-Day.

Here are the day’s recaps first:

The DOW skyrocketed 168 points to close at a new all-time high of 23,441 propelled by stellar earnings from the likes of Caterpillar, 3M, GM and Fiat Chrysler.

Here’s how the session’s IG Corporate new issue volume impacted the WTD and MTD syndicate estimates:

The IG Corporate WTD total is 108.88% of this week’s syndicate midpoint average forecast or $23.724b vs. $21.79b.

MTD we’ve priced 98.36% of the syndicate forecast for October IG Corporate new issuance or $90.178b vs. $91.68b.

There are now 8 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

Mischler Financial is proud to have been named a Selling Group member on today’s $1bn Ford Credit Auto Lease Trust Series 2017-B. Thank you Team Ford for choosing Mischler from among your diversity candidates.

The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 7 IG Corporate-only new issues was <18.71> bps.

BAML’s IG Master Index was unchanged at +101 tying its post Crisis low set with last Friday’s close.

Today’s Goldman Sachs transaction was a $7bn three-part comprised of a 5nc4 fixed-to-floater as well as a 5yr FRN both due 10/31/2022. Mischler proudly served as an active Co-Manager on today’s longest tranche of that issuance – the 21nc20 fixed-to-floating due 10/31/2038 so I am writing about that tranche this evening.

It’s important to note that in speaking with today’s accounts they like the pro-U.S. growth sentiment and rates that are helping to boost markets especially for bank and finance issuers. Broader corporate tax reform will certainly lead to additional M&A activity ahead which is good for banks/finance. Several international accounts expressed their view that U.S. banks as flight to relative safety underscore an overall bullish sentiment in the sector. Other investors were attracted by some additional yield compared to the risk-reward in European banks and Asian banks. We’ve seen some front-loaded supply in the sector post Q3 earnings but the demand for GS paper has been consistently strong.

BAML’s IG Master Index was unchanged at +101 tying its post Crisis low set with last Friday’s close.

Here’s a review of this week’s five key primary market driver averages for IG Corporates only through Monday’s session followed by the averages over the prior six weeks:

KEY IG CORPORATE
NEW ISSUE DRIVERS

MON.
10/23

AVERAGES
WEEK 10/16

AVERAGES
WEEK 10/09

AVERAGES
WEEK 10/02

AVERAGES
WEEK 8/25

AVERAGES
WEEK 8/18

AVERAGES
WEEK 9/11

New Issue Concessions

1.33 bps

0.41 bps

<0.38> bps

1.18 bps

1.38 bps

0.62 bps

1.40 bps

Oversubscription Rates

2.23x

2.89x

3.03x

3.50x

3.31x

3.18x

3.27x

Tenors

6.20 yrs

8.85 yrs

9.77 yrs

12.00 yrs

8.50 yrs

8.21 yrs

9.84 yrs

Tranche Sizes

$793mm

$804mm

$906mm

$608mm

$645mm

$483mm

$674mm

Avg. Spd. Compression
IPTs to Launch

<12.75> bps

<16.81> bps

<19.81> bps

<18.40> bps

<20.19> yrs

<18.40> bps

<18.91> bps

Rates Trading Lab

Most of today’s trading was confined to a tight range with yields slowly migrating higher as the curve steepened. Then came the news that John Taylor had reportedly won a straw poll on a show of hands when President Trump asked GOP Senators about their Fed pick. Market got hit with the belly leading the sell-off and 5yrs traded at 2.044%, 10yr at 2.4225% and 30yr 2.934%. Stops were hit in futures as TY touched 124-18 before bouncing. Taylor had a big day in the betting pools, for what it’s worth, solidifying his second place standing. https://www.predictit.org/Market/3306/Who-will-be-Senate-confirmed-Fed-Chair-on-February-4%2C-2018 Lost in the fray were reports that the trio of Corker, McCain and Paul might not support a tax cut program if not revenue neutral and that Jeff Flake bowed out of the Arizona Republican race, but not before saying that “[w]ithout fear of the consequences and without consideration of the rules of what is politically safe, we must stop pretending that the conduct of some in our executive branch are normal. They are not normal. Reckless, outrageous and undignified behavior has become excused as telling it like it is when it is actually reckless, outrageous and undignified.” Meanwhile, stocks carried on, with records falling once again and the financial networks straining to contain their giddiness.

Thoughts:

Today’s price action was a textbook case of why this market is becoming so difficult to trade. I understand that a Taylor chairmanship and its potentially consequential rules-based policy metrics is a decidedly hawkish event. Countering that, however, is more stagnation on the legislative front. Senators Corker and Flake are now question marks in the Republican camps along with the fiscal conservatives. I know we have broken through established support levels and that it may trigger a further sell-off on that basis alone, but I think this is a counter-trade. Whatever happens, it will happen fast. Machines can hit bids and lift offers faster than you can blink.

10/16 – EU imposes total ban on oil & petroleum to NOKO. 10/6 – Russian news announces NOKO is preparing to test fire a missile capable of reaching the U.S. Coast. Recall Trump’s “calm before the storm” comment. NOKO rumored to reach out to GOP to help “figure out Trump.” On 9/24 Trump warns NOKO leadership that if rhetorical threats continue its leaders “won’t be around much longer.” NOKO claims comment is an “Act of War” and that it now has the right to shoot down U.S. bombers “even outside of NOKO air space.” Beijing calls situation “grave.” On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Says if Kim continues to threaten the U.S., allies and the world “we will have no choice but to totally destroy North Korea.”

ELEVATED“The EU”

Germany’s Angela Merkel re-elected to her 4th term but nationalist Alternative for Germany (AfD) party & other right wing parties gain to force a 6-party coalition government. Worst performance for Merkel’s CDU and Christian Social Union party since 1949. Immigration a source of tension. Right wing has a seat in German decision-making.

EU and Macron-Merkel coalition to squeeze U.K. re: BREXIT “divorce” bill. Companies prepping for messy BREXIT & 2 years of weak growth. EU wants UK to pay exit bill before any negotiations. UK withdrawal from EU takes place in 3/2019. Moody’s downgraded the UK on 9/22 to Aa2 from Aa1.

CAUTION“U.S. political gridlock”

31 year old conservative Sebastian Kurz becomes the world’s youngest leader winning Austria’s Presidential election. He is expected to form a coalition with the resurgent far right anti-immigration party or Freedom Party. (See the “QC” dated 11-18-2015 and 11-30-2016).

10/16 – Catalonian Pres. Puigdemont defended right to claim to independence. Spain’s Pres. Rajoy can use Article 155 to suspend the Catalan gov’t. and take over in days. If not, Puigdemont’s diverse coalition may fall apart. Results of Catalonia’s Oct. 1st independence referendum vote posted 90% support for secession from Spain. National riot police cracked down at the voting booths injuring ~900 voters in the EU nation’s worst crisis in 40+ years since turning to democracy.

Steve Bannon’s war on the GOP’s “imperialist” political class targets Senate Majority Leader Mitch McConnell among others to unite Republicans behind Trump to get things done in Washington.

GOP tax overhaul plan would double deduction and create 3 tax brackets vs. 7. Bringing Corporate rate to 20% might return trillions of dollars to the U.S. that corps are keeping overseas. Consensus GOP support to pass legislation still in doubt. Partisan politics.

October MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. October MTD thru 10/16 – there were 43 terrorist attacks. Killing 541 people and wounding 638.

China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns. National Congress of the Chinese Communists Party held on Oct. 18th. Most decisions are made prior to it but it’s historically pivotal regarding leadership changes & reshuffling as elders retire.

Investment grade corporate bond trading posted a final Trace count of $17.1b on Thursday versus $17b on Wednesday and $16.9b the previous Thursday.

The 10-DMA stands at $16.7b.

Syndicate IG Corporate-only Volume Estimates For This Week and October

IG Corporate New Issuance

This Week
10/09-10/13

vs. Current
WTD – $32.559b

October 2017

vs. Current
MTD – $47.154b

Low-End Avg.

$20.15b

161.58%

$90.96b

51.84%

Midpoint Avg.

$20.875b

155.97%

$91.68b

51.43%

High-End Avg.

$21.60b

150.74%

$92.42b

51.02%

The Low

$15b

217.06%

$110b

42.87%

The High

$26b

125.23%

$75b

62.87%

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition! Thank you to all of them. 19 of today’s respondents are in the top 20 and 21 are among 2017’s YTD top 23 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. 23 are in the top 26. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates). The participating desks represent 81.44% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility. But it’s not only about their volume forecasts, it’s also about their comments! This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from. It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.

As always “thank you” to all the syndicate desks that participated in today’s survey. I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years! That’s 2014, 2015 and 2016 !!

Let’s dive right into this week’s primary market recap and data downloads –

North Korea still remains atop the geopolitical risk factors. The only news therein was yesterday’s announcement by the U.S. Geological Survey that it recorded an event at the sight of previous North Korean nuclear tests that measured 2.9 on the Richter scale implying it could have been triggered by further underground nuclear tests. Spain’s Catalon independence risks lowered from “Elevated” to “Cautious” as Puigdemont stopped short of declaring independence pushing instead for negotiations with Madrid. President Rajoy can invoke Article 155 to suspend the Catalan government and subsequently take over. If not, then Puigdemont’s coalition may fall apart. Trump’s shortlist for the new FOMC head has dwindled to 4 candidates – Yellen, Gary Cohn, Kevin Warsh and Jerome Powell. The market is looking at a 76% chance of a December rate hike off a bit from last week. Q3 earnings are underway with the big FIGs two-thirds done and with Goldman Sachs and Morgan Stanley announcing next Tuesday, October 17th. Of the 4 six packs banks that already announced, should BAML, CITI, JPM or WFC not print today, next week’s volume could be quite robust.

Entering this morning’s Friday session –

The IG Corporate WTD total stands at $28.552b. We priced $7.677b more than this week’s average estimate of $20.875b or 36.78%.

MTD we have now priced 47.06% of the syndicate projection for October IG Corporates or $43.147b vs. $91.68b.

Entering today’s session, the YTD IG Corporate-only volume is $1,118.298b vs. $1,111.191b on October 13th, 2016 or $7.107b (0.64%) more than a year ago.

The all-in or IG Corporate plus SSA YTD volume is $1,380.756b vs. $1,406.275b on October 13th, 2016 or $25.519b (1.85%) less than the year ago total.

Entering this morning’s session, here are the five key primary market driver averages for the 33 IG Corporate-only deals that priced this week.

Spreads across the four IG asset classes was unchanged week-on-week at 1.75 bps measured against their post-Crisis lows.

The “BBB” asset class tied its post-Crisis low of +103.

The 19 major industry sectors also widened 0.68 bps to 6.00 vs. 5.32 bps also as measured against their post-Crisis lows.

Of note, the Banking, Insurance and Services sectors set new post-Crisis lows this week while Basic Industry, Capital Goods, Consumer Products and Transportation sectors tied their post-Crisis lows this week. In total 7 out of the 19 major industry sectors or 38%, set or tied post-Crisis lows.

For the week ended October 11th, Lipper U.S. Fund Flows reported an inflow of $2.415b into Corporate Investment Grade Funds (2017 YTD net inflow of $98.803b) and a net inflow of $966.777m into High Yield Funds (2017 YTD net outflow of $6.364b).

Taking a look at the secondary trading performance of this week’s 33 IG Corporate and 1 SSA new issues, of the 34 deals that printed, 19 tightened versus NIP for a 56.00% improvement rate, 10 widened (29.50%) and 5 were flat (14.50%).

Entering today’s Friday session here’s how much we issued this week:

IG Corps: $28.552b

All-in IG (Corps + SSA): $43.147b

And now ladies and gentlemen, as honored members of the “B&B” Hall of Fame it’s time for the guy-in-the corner to ask today’s question “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”
Thank you in advance for your time and contribution!

Although next week is a holiday shortened one, credit spreads are tightening, the VIX set a new low yesterday and equity markets continue setting new all-time highs. The CT10 is yielding 2.35% at mid-day today so post-Q3 earnings I expect to see a nice rush to print through the end of the year amidst future rate hike sentiment. I have maintained that rates will increase at the top of 2018, which means at the January 31st FOMC meeting, however, that’s my take. “If” the meeting was held today, the chances of a Fed hike are currently 86%. Remember folks there is a LOT playing out in our new world order. So, why is the VIX so low? First, the VIX is a street standard index so I will continue to post it here in the “QC” until perhaps one day it loses its prestige with market participants. Having said that, it IS the index most akin to gambling with one’s emotions. Unlike a basket of stocks or an index in which we can strip out good apples from bad apples, reverse engineer etc., the VIX volatility index gages market sentiment more than other indices. It’s an indication that the market believes everything is good in the world of finance when in fact, the world is far from that. With myriad highly volatile global event risk factors playing out each and every day think about this – the Fed has NEVER had to unwind a $4.5 trillion balance sheet. Europe has NEVER dealt with a BREXIT. We have NEVER experienced the current high level threat of nuclear rhetoric and rapid development as exists with North Korea and that includes the throes of the Cold War during the early ‘60s. Scroll down to my “QC” Geopolitical Risk Monitor just below for some other developing items. When one of the major events turns south the VIX will spike!

As for our IG dollar DCM, we do have some big news for next week namely – Citigroup and J.P. Morgan announce Q3 earnings on Thursday, October 12th and Bank of America and Wells Fargo release earnings on Friday the 13th. Goldman Sachs and Morgan Stanley follow on Tuesday the 17th. They are the smart money and they lead the way for issuance each quarter. They have more to do before 2017 is a wrap and I strongly suspect we’ll see hefty cumulative issuance from the six-pack. The average estimate for next week’s IG Corporate only new issue volume is $20.875b. The high estimate was $26b from one desk and five others said $15b either flat out or as part of a range.

All 24 syndicate desks in my weekly “QC” survey responded once again and they are waiting below to make an early exit ahead of traffic on this start of a welcome three-day weekend. Please scan through the below recaps and I promise you they’ll wait for you with their comments and numbers for next week before the well-deserved Columbus Day weekend! So, sit back, relax and enjoy this Best & Brightest edition of the “QC.”

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

The IG Corporate WTD total is 77.22% of this week’s syndicate midpoint average forecast or $14.595b vs. $18.90b.

MTD we’ve priced 15.92% of the syndicate forecast for October IG Corporate new issuance or $14.595b vs. $91.68b.

There are now 10 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

BAML’s IG Master Index was unchanged at +104 tying its post-Crisis set on Wednesday and that previously dated back to July 2007.

Investment grade corporate bond trading posted a final Trace count of $16.9b on Thursday versus $20.3b on Wednesday and $18.9b the previous Thursday.

The 10-DMA stands at $17.6b.

The “QC” Geopolitical Risk Monitor

Risk Level/Main Factor

Geopolitical Risks

HIGH
North Korea

10/6 – Russian news announces NOKO is preparing to test fire a missile capable of reaching the U.S. Coast. Recall Trump’s “calm before the storm” comment. NOKO rumored to reach out to GOP to help “figure out Trump.” On 9/24 Trump warns NOKO leadership that if rhetorical threats continue its leaders “won’t be around much longer.” NOKO claims comment is an “Act of War” and that it now has the right to shoot down U.S. bombers “even outside of NOKO air space.” Beijing calls situation “grave.” On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Trump says “if Kim continues to threaten the U.S., allies and the world, we will have no choice but to totally destroy North Korea.”

ELEVATED“The EU”

-Regional parliament meets 10/9 defying a Spanish Constitutional Court suspension. Results of Catalonia’s Oct. 1st independence referendum vote posted 90% support for secession from Spain. National riot police cracked down at the voting booths injuring nearly 900 voters in what is the EU nation’s worst territorial crisis since turning to democracy 40+ years ago. Catalan leadership is divided on rush to independence given potential civil unrest and economic consequences. Germany’s Angela Merkel re-elected to her 4th term but nationalist Alternative for Germany (AfD) party & other right wing parties gain to force a 6-party coalition government. Worst performance for Merkel’s CDU and Christian Social Union party since 1949. Immigration a source of tension. Right wing has a seat in German decision-making.

-EU and Macron-Merkel coalition to squeeze U.K. re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU. UK withdrawal from EU takes place in March, 2019. Moody’s downgraded the U.K. to Aa2 from Aa1.

CAUTION“U.S. political gridlock”

GOP tax overhaul plan would, in their view, double deduction and create 3 tax brackets vs. 7. Bringing Corporate rate to 20% might return trillions of dollars to the U.S. that corps are keeping overseas. Consensus GOP support to pass legislation still in doubt. Partisan politics. Trump recently bypassed GOP to close a deal w/Dems to extend debt limit to December.

-Las Vegas mass shooting on Sunday 10/01 is the worst in U.S. history killing 58 and 515 injured.

-October MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. October MTD there were 13 terrorist attacks. Killing 64 people and wounding 72.

-On July 28th Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. The Brookings Institute calls Pakistan “the world’s most dangerous country.” Democracy in nuclear-armed country with 205m population at risk.

-Mueller’s continuing FBI probe into Trump.

MODERATE“China”

-China hard landing: rising corporate debt & slower GDP growth are OECD and IMF concerns. National Congress of the Chinese Communists Party held on Oct. 18th. Most decisions are made prior to it but it’s historically pivotal regarding leadership changes & reshuffling as elders retire.

Syndicate IG Corporate-only Volume Estimates For This Week and October

IG Corporate New Issuance

This Week
10/02-10/06

vs. Current
WTD – $14.595b

October 2017

vs. Current
WTD – $14.595b

Low-End Avg.

$17.54b

83.21%

$90.96b

16.05%

Midpoint Avg.

$18.90b

77.22%

$91.68b

15.92%

High-End Avg.

$20.25b

72.07%

$92.42b

15.79%

The Low

$10b

145.95%

$110b

13.27%

The High

$26b

56.13%

$75b

19.46%

Rates Trading Lab- Mischler’s Tony Farren Reports In

Economic data this week, outside of payrolls, has been very good (details below). Treasuries have traded poorly over the last four weeks. The 10yr is currently trading at 2.40% (98-22) the level where buyers are expected to step in. The 2yr (1.524%) traded at a yield not seen since 2008. Considering the sell off over the last four weeks in USTs it makes sense for the shorts to start to cover some of their positions at current levels. Remember the longs basically did not exist in this week’s JPM Survey. I expect the 2.40% in 10’s to hold today before the long weekend (Columbus Day on Monday).

Looking ahead at factors that could impact the Treasury market –

What did President Trump’s comment last night “calm before the storm” mean? (North Korea?)

What happens between Madrid and Catalonia?

Does the GOP deliver on Tax Reform?

Do the U.S. and Global stock market rallies continue or take a breather?

Who does President Trump select as Chair of the FOMC?

Fed-speak will be active again next week

The FOMC Minutes from the Sept 19-20 Meeting will be released on Wednesday.

Next week’s Treasury supply will be a challenge for the UST market.

($56 billion in 3’s, 10’s & 30’s next Wednesday & Thursday)

PPI will be released on Thursday.

CPI will be released on Friday.

Retail sales will be released on Friday.

Tropical Storm Nate could impact the U.S. on Sunday as a hurricane.

As for recent economic data, it seems too good to be true with Payrolls the exception. Is the theory that hurricanes are a short term negative for the economy wrong? This week’s data makes that a fair question to ask –

ISM manufacturing the strongest since 2004 (Mon).

ISM non-manufacturing the strongest since 2005 (Weds).

Vehicle sales this month were very strong (Tues).

Unemployment Rate has not been lower since Dec 2000.

The U6 rate has not been lower since May 2007.

Average hourly earnings MoM has not been higher since June 2007.

Average hourly earnings YoY has not been higher since 2009.

The Participation Rate has not been higher since September 2013.

Household employment and labor force both had sizeable gains.

Here are the negatives from this morning’s Employment Report –

Payrolls were negative for the first time since August 2010.

The two-month revision for payrolls was <38k>.

Average weekly hours was unchanged.

-Tony Farren

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition! Thank you to all of them. 20 of those participants are among 2017’s YTD top 21 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates). The participating desks represent 81.59% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility. But it’s not only about their volume forecasts, it’s also about their comments! This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from. It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.

As always “thank you” to all the syndicate desks that participated in today’s survey. I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years! That’s 2014, 2015 and 2016 !! More importantly, however, you are helping the nation’s oldest Service Disabled Veteran broker-dealer grow in a more meaningful and sustainable way. So, thank you all! -RQ

Let’s dive right into this week’s primary market recap and data downloads as a segue to our syndicate desk canvass as to what is in expected next week i.e. DCM market and new investment grade corporate debt issuance.

North Korea remains global event risk factor number 1 with Kim Jong-Un’s regime making no progress this week toward negotiating with the U.S. When NOKO is dormant it means something is brewing and/or amiss. Stay thirsty my friends!! Spanish Catalonia adds more EU suspense to the mix with 90% support for secession from Spain. The independence referendum, in defiance of the Spanish Constitutional Court, erupted in violence with Spanish National police injuring over 900 voters in attempts to prevent citizens from voting. Catalonia’s regional parliament meets on Monday, October 9th in defiance of the Spanish Court’s suspension. GOP hopes of tax reform legislation may not appear until early in 2018 and it remains to be seen what support it has with opposition coming from within the party. Earlier this week we saw the impact of hurricanes Harvey, Irma and Maria on Vehicle Sales while this morning’s numbers confirm how skewed they will be going forward. Clearly the hurricanes reduced the NFP number this morning as unemployment fell while the labor force participation rate rose. Any weak number is chalked up to storms while strength is attributed to a resilient economy. Go figure!Entering this morning’s Friday session –

The IG Corporate WTD total stands at $14.595b. We priced $4.305b less than this week’s average estimate of $18.90b or 77.22%.

MTD we have now priced 15.92% of the syndicate projection for October IG Corporates or $14.595b vs. $91.68b.

Entering today’s session, the YTD IG Corporate-only volume is $1,089.746b vs. $1,088.336b on October 6th, 2016 or 0.13% more than a year ago.

The all-in or IG Corporate plus SSA YTD volume is $1,349.204b vs. $1,374.92b on October 29th, 2016 or 1.91% less than the year ago total.

Entering this morning’s session, here are the five key primary market driver averages from the 28 IG Corporate-only deals that priced this week.

Spreads across the four IG asset classes tightened 2.50 bps to 1.75 bps vs. 4.25 bps as measured against their post-Crisis lows.

The 19 major industry sectors also tightened 4.21 bps to 5.32 vs. 9.53 bps also as measured against their post-Crisis lows.

For the week ended October 4th, Lipper U.S. Fund Flows reported an inflow of $3.770b into Corporate Investment Grade Funds (2017 YTD net inflow of $96.388b) and a net inflow of $645.473m into High Yield Funds (2017 YTD net outflow of $7.331b).

Taking a look at the secondary trading performance of this week’s 24 IG Corporate and 4 SSA new issues, of the 28 deals that printed, 20 tightened versus NIP for a 50% improvement rate, 3 widened (10.50%) and 5 were flat (18.00%).

The VIX closed yesterday at a new low of 9.17 (Amazing!) while issuance is running neck and neck with last year’s record pace given low rates and tightening spreads. 7 of the 19 IG sector spreads set or equaled post Crisis lows this week and 2 of the 4 IG asset classes did the same!

Entering today’s Friday session here’s how much we issued this week:

IG Corps: $14.595b

All-in IG (Corps + SSA): $26.475b

And now ladies and gentlemen, as honored members of the “B&B” Club it’s time for the guy-in-the corner to ask today’s question “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”

As always, I hope the daily “QC” and my data downloads are helpful and informative to you. Without your participation this widely read “QC” survey edition can’t get done. I greatly appreciate your meaningful sound bites that bring your numbers and ranges to life. A LOT of Fortune Tsy teams read this every day and they love it! I consistently receive positive feedback about the “QC” from them directly. Wall Street fixed income syndicates desks that contribute to this column are directly contributing to a much bigger picture, while also helping the nation’s oldest Service Disabled Veteran broker-dealer build in a more meaningful and sustainable way.

Please know that on each and every new issue, the guy-in-the-corner is ALWAYS be in YOUR corner on deal day! If an issuer asks you who some of the best diversity firms are, my hope is that you’ll mention Mischler Financial and the guy-in-the-corner. Our distribution is high quality, prolific and consistent. On deal day, we perform enough to influence your bid-to-cover rates with REAL unpadded orders. Besides where else can you get an award winning daily fixed income DCM piece for FREE? But most of all, we have a great certification as the nation’s oldest Service Disabled Veteran broker-dealer. We demonstrate remarkable authenticity here at Team Mischler. Our commitment to our demographic is our foundation. We donate 10% of our earnings to heavily-vetted veteran foundations and non-profits to help our active and veteran service men and women and their families. It’s all well worth it and I hope you think so too!
Thank you and wishing you and yours a great long Columbus Day weekend! -Ron”

Equity markets were in the red today due to mounting tensions between the U.S. and North Korea, concern over historic gains by nationalist parties in German elections forcing Angela Merkel to form a coalition government, and increasing jitters over whether the FED hikes rates one more time in 2017 or not.

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

The IG Corporate WTD total is 35.14% of this week’s syndicate midpoint average forecast or $6.75b vs. $19.21b.

MTD we’ve priced 105.02% of the syndicate forecast for September or $118.096b vs. $112.45b.

There are now 7 issuers in the IG credit pipeline.

Today’s IG Primary & Secondary Market Talking Points

Hudson Pacific Properties LP upsized today’s 10-year Senior Notes new issue to $400mm from $300mm at the launch and at the tightest side of guidance.

The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 12 IG Corporate-only new issues was <18.29> bps. Including today’s IG-rated Federal Realty $25 par preferred, the average compression of today’s 13 new issues was <17.85> bps.

BAML’s IG Master Index was unchanged at +111. +106 represents the post-Crisis low dating back to July 2007.

Investment grade corporate bond trading posted a final Trace count of $13.5b on Friday versus $17.5b on Thursday and $12.7b the previous Friday.

The 10-DMA stands at $17.3b.

The “QC” Geopolitical Risk Monitor

Risk Level/Main Factor

Geopolitical Risks

HIGH
North Korea

On 9/24 Trump warns NOKO leadership that if rhetoric threats continue its leaders “won’t be around much longer.” NOKO responds saying it has the right to shoot down U.S. bombers “even outside of NOKO air space.” Beijing termed calls situation “grave.” On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Says if Kim continues to threaten the U.S., allies and the world “we will have no choice but to totally destroy North Korea.” On 9/14 North Korea launched another ballistic missile over Northern Japan in the face of UN Security Council sanctions. Trump warned U.S. military options are “effective and overwhelming”. Missile traveled 2,300 miles landing in the Pacific. Guam is 2,131 from NOKO! On 9/03 NOKO detonated a 100 kiloton hydrogen bomb 5-times more powerful than that dropped on Nagasaki causing a 6.3 magnitude earthquake. Head of IAEA said hydrogen bomb test is “new dimension of global threat” to the world. On Tuesday, 8/29 NOKO launched an ICBM over Japan that landed in the Pacific Ocean. On Monday, 9/04 U.S. Amb. to the UN, Nikki Haley said “the time has come to exhaust all diplomatic means to end this crisis.” Called for strongest sanctions vs. NOKO. Friday 8/11 Trump said “U.S. military solutions are in place, locked and loaded” matching his earlier “fire and fury” statement. On Th. 8/10 NOKO announced its plan to “pre-emptively strike Guam in mid-August.” Trump’s reaction, “Maybe my “fire and fury” threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location in U.S.

ELEVATED

Germany’s Angela Merkel re-elected to her 4th term but nationalist Alternative for Germany (AfD) party & other right wing parties gain to force a 6-party coalition government. Worst performance for Merkel’s CDU and Christian Social Union party since 1949. Immigration a source of tension. Right wing has a seat in German decision-making.

On July 28th Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. The Brookings Institute calls Pakistan “the world’s most dangerous country.” Democracy in nuclear-armed country with 205m population at risk.

EU and Macron-Merkel coalition to squeeze U.K. for all it can re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU. UK withdrawal from EU takes place in March, 2019.

CAUTION“U.S. political gridlock”

GOP to release tax overhaul plan week of Sept. 25th & Senate will vote on new Graham-Cassidy healthcare bill to repeal Obama Care. Consensus GOP support to pass legislation still in doubt. Partisan politics. Trump recently bypassed GOP to close a deal w/Dems to extend debt limit to December.

September MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. September MTD there were 87 terrorist attacks. killing 347 people and wounding 581.

Syndicate IG Corporate-only Volume Estimates For This Week and September

IG Corporate New Issuance

This Week
9/25-9/29

vs. Current
WTD – $6.75b

September 2017

vs. Current
WTD – $118.096b

Low-End Avg.

$18.17b

37.15%

N/A

N/A

Midpoint Avg.

$19.21b

35.14%

$112.45b

105.02%

High-End Avg.

$20.25b

33.33%

N/A

N/A

The Low

$10b

67.50%

$100b

118.096%

The High

$30b

22.50%

$125b

94.48%

Sneak Preview of “Thank You For Your Service”

Friday, October 9th is Veteran’s Day here in the U.S., and in recognition of this important day, I thought it fitting to share a sneak preview of an upcoming film that is getting a lot of buzz in the industry.THANK YOU FOR YOUR SERVICE profiles a group of U.S. soldiers returning from Iraq who aer struggling to integrate back into family and civilian life, while living with the memory of a war that threatens to destroy them long after they’ve left the battlefield. The film stars Miles Teller and Haley Bennett. The film is the directorial debut of Jason Hall, a graduate of my alma mater, the University of Southern California’s School of Cinematic Arts or “SCA” and is based on the non-fiction book by David Finkel and adapted for the screen by Finkel and Hall. The Universal Pictures production opens in theatres on Wednesday, October 27th. As an SCA Alum, I am doing my part to get the word out from my corner desk here at our nation’s oldest Service Disabled Veteran broker dealer. Considering this past weekend’s controversies surrounding the NFL, rights, freedoms and respect of our flag, country, service men and women and first responders, I thought that perhaps we should all make it a point to see “Thank You For Your Service” at our local theatres when it’s released. The ensemble cast tackles myriad veteran-focused situations, disorders and struggles pertinent to today’s public discourses. The film overlays nicely with the Service Disabled Veteran mandate that we are all dedicated to here each and every day at Mischler Financial.

Here’s the preview:

Have a great evening and FIGHT ON!
Ron Quigley, Managing Director and Head of Fixed Income Syndicate

No IG issues printed today, however, it does not mean that nothing happened. In fact, something big happened! The Best & Brightest all came back to me once again today in the “QC’s” most eagerly anticipated Friday edition. That’s right they’re busy lining things up for next week and they’re taking just a little bit of time out to respond in their own words and with their own volume thoughts for next week’s IG Corporate new issue volume. And you know what? ….They’re all here just waiting for you to scroll down below. So, let’s get thru the recaps et al and then it’s onto the best and the brightest in the world of investment grade dollar syndicate. Thank you as always to those 24 desks and the very fine operatives on all of them for participating.

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

The IG Corporate WTD total is 65.41% of this week’s syndicate midpoint average forecast or $17.876b vs. $27.33b.

MTD we’ve priced 99.02% of the syndicate forecast for September or $111.346b vs. $112.45b.

There are now 4 issuers in the IG credit pipeline

Today’s IG Primary & Secondary Market Talking Points

BAML’s IG Master Index was unchanged at +111. +106 represents the post-Crisis low dating back to July 2007.

Investment grade corporate bond trading posted a final Trace count of $17.5b on Thursday versus $18.8b on Wednesday and $20.2b the previous Thursday.

The 10-DMA stands at $17.1b.

The “QC” Geopolitical Risk Monitor

Risk Level/Main Factor

Geopolitical Risks

HIGH North Korea

On 9/19 Trump spoke before UN referring to Kim as “Rocket Man on a suicide mission.” Says if Kim continues to threaten the U.S., allies and the world “we will have no choice but to totally destroy North Korea.” On 9/14 North Korea launched another ballistic missile over Northern Japan in the face of UN Security Council sanctions. Trump warned U.S. military options are “effective and overwhelming”. Missile traveled 2,300 miles landing in the Pacific. Guam is 2,131 from NOKO! On Sunday, 9/03 NOKO detonated a 100 kiloton hydrogen bomb 5-times more powerful than that dropped on Nagasaki causing a 6.3 magnitude earthquake according to the U.S. GS. Head of IAEA said the hydrogen bomb test is a “new dimension of global threat” to the world. On Tuesday, 8/29 NOKO ICBM launched an ICBM over Japan that landed in the Pacific Ocean. On Monday, 9/04 U.S. Amb. to the UN, Nikki Haley said “the time has come to exhaust all diplomatic means to end this crisis.” Called for strongest sanctions vs. NOKO. Monday 8/31 began joint U.S. & SOKO military exercise the world’s largest computerized command controlled with over 80,000 troops. CIA Director Mike Pompeo says of NOKO “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Friday 8/11 Trump said “U.S. military solutions are in place, locked and loaded” matching his earlier “fire and fury” statement. On Th. 8/10 NOKO announced its plan to “pre-emptively strike Guam in mid-August.” Trump’s reaction, “Maybe my “fire and fury” threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location in U.S. U.S. sanctions against select Chinese banks to pressure PRC to influence NOKO failed. China insiders say PRC does not have influence with NOKO that the U.S. thinks it does. China in precarious position given South China Sea Islands. Asian allies now justified to build out their respective militaries.

ELEVATED BREXIT Fallout

On July 28th Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. The Brookings Institute calls Pakistan “the world’s most dangerous country.” Democracy in nuclear-armed country with 205m population at risk.

EU and Macron-Merkel coalition to squeeze U.K. for all it can re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU. UK withdrawal from EU takes place in March, 2019.

September MTD Terror Stats: Despite destroying the Caliphate, ISIS is now scattered across a wider MENA region and Europe. There were 4 terrorist attacks thus far in September – that had 100 or more deaths – killing 615 people and wounding 733.

Syndicate IG Corporate-only Volume Estimates For This Week and September

IG Corporate New Issuance

This Week
9/18-9/22

vs. Current
WTD – $17.876b

September 2017

vs. Current
WTD – $111.346b

Low-End Avg.

$26.29b

68.00%

N/A

N/A

Midpoint Avg.

$27.33b

65.41%

$112.45b

99.02%

High-End Avg.

$28.375b

63.00%

N/A

N/A

The Low

$20b

89.38%

$100b

111.346%

The High

$36b

49.66%

$125b

89.08%

The Best and the Brightest” Syndicate Forecasts and Sound Bites for Next Week’s Investment Grade Corporate Debt

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition! Thank you to all of them. 19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates). The participating desks represent 81.46% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility. But it’s not only about their volume forecasts, it’s also about their comments! This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from. It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.

Here are this week’s primary market recap and data downloads:

Fed Chair Yellen continues to express concern about the absence of inflation that she’d like to see at 2%. The FOMC tempts markets with accolades about the how low the unemployment rate is. Meanwhile, Wednesday’s eagerly anticipated $4.5 trillion QExit guidance amounted to nothing more than “we’ll start that in October!” Although the FOMC voiced there’d be one more rate hike in 2017 and 3 in 2018, the market doesn’t really believe that. The devastating hurricanes Harvey, Irma and Maria have not begun to show up in our economic data. I don’t believe we’ll see a rate hike in 2017. Additionally, the next meeting in late October is not followed by a press conference so it’s highly unlikely that they’ll raise rates at that time. That leaves one meeting left in December. Do you think the Fed is giving out holiday gifts this year? I think not. The S&P, Dow and Nasdaq once again reached new all-time highs this week.

Entering this morning’s Friday session –

The IG Corporate WTD total stands at $17.876b. We priced $9.454b less than this week’s average estimate of $27.33b or 65.41%.

MTD we have now priced 99.02% of the syndicate projection for September IG Corporates or $111.346b vs. $112.45b.

Entering today’s session, the YTD IG Corporate-only volume is $1,053.881b vs. $1,055.736b on September 22nd, 2016 or 0.18% less than a year ago.

The all-in or IG Corporate plus SSA YTD volume is $1,280.209b vs. $1,331.873b on September 22nd, 2016 or 4.04% less than the year ago total.

Entering this morning’s session, here are the five key primary market driver averages from the 37 IG Corporate-only deals that priced this week

Spreads across the four IG asset classes tightened 3.5 bps to 7.50 bps vs. 11.00 bps as measured against their post-Crisis lows.

The 19 major industry sectors also tightened 3.58 bps to 11.95 vs. 15.53 bps also as measured against their post-Crisis lows.

For the week ended September 20th, Lipper U.S. Fund Flows reported an inflow of $2.858b into Corporate Investment Grade Funds (2017 YTD net inflow of $91.384b) and a net inflow of $865.832m into High Yield Funds (2017 YTD net outflow of $8.410b).

Taking a look at the secondary trading performance of this week’s 37 IG Corporate and 4 SSA new issues, of the 41 deals that printed, XX tightened versus NIP for a 75.50% improvement rate, 5 widened (12.25%) and 5 were flat (12.25%).

Entering today’s Friday session here’s how much we issued this week:

IG Corps: $17.876b

All-in IG (Corps + SSA): $23.389b

And now ladies and gentlemen, as honored members of the “B&B” Club it’s time for the guy-in-the corner to ask today’s question, “what are your thoughts and numbers for next week’s IG Corporate new issue volume?”

I have a special edition for you tonight, it is chock full of all the usual talking points of our dollar IG primary markets as well as a feature for you that I recommend you all read about Prudential Financial’s long and wonderful history giving back to our nation’s veteran community. Mischler was selected as an active Co-Manager today’s Prudential Financial 30nc10 f-t-f new issue. Then, it’s on to a permission-ed piece by the Edison Electric Institute re: what they and our utility sector are doing to remedy and resolve the damage done by the recent hurricanes Irma and Harvey. Edison is quite the authority for all things power-related in the United States.

So, sit back relax, the day is done and this is all you really need to know. Thank you as always for stopping in.

What’s more is the S&P, the Dow and Nasdaq all closed today’s session at new all-time highs. CDXIG and HV also both reached new tights!

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

The IG Corporate WTD total is 58.55% of this week’s syndicate midpoint average forecast or $19.175b vs. $32.75b.

MTD we’ve priced 59.95% of the syndicate forecast for July or $67.415b vs. $112.45b.

There are now 12 issuers in the IG credit pipeline

Today’s IG Primary & Secondary Market Talking Points

Mischler Financial was named a “passive” Co-Manager on today’s Metropolitan Life Global Funding 10-year Secured FA-backed Notes tranche. We thank Team MetLife for selecting Mischler, the nation’s oldest Service Disabled Veteran broker dealer, from among your many diversity partners.

PS Business Parks Inc. upped its $25 par PerpNC5 cumulative preferred Series “X” new issue to $200mm (8mm shs) from an initially announced $100mm (4mm) size at the launch and at the tightest side of guidance.

Penske Truck leasing Co. increased its long 5-year 144a/REGS Senior Notes new issue to $600mm from $500mm today at the launch and at the tightest side of guidance.

Banistmo S.A. upsized today’s 5-year 144a/REGS Senior Notes new issue to $500mm from $400mm at the launch and at the tightest side of guidance.

The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 13 IG Corporate-only new issue, was <26.56> bps. Including today’s PS Business Parks IG-rated Preferred, the spread compression across 14 tranches was <25.11> bps.

BAML’s IG Master Index was unchanged at +117. +106 represents the post-Crisis low dating back to July 2007.

· On Sunday, 9/03 NOKO detonated a 100 kiloton hydrogen bomb 5-times more powerful than that dropped on Nagasaki causing a 6.3 magnitude earthquake according to the U.S. Geological Survey. Head of IAEA (Int’l. Atomic Energy Authority) said the hydrogen bomb test a “new dimension of global threat” to the world. On Tuesday, 8/29 NOKO ICBM launched an ICBM over Japan that landed in the Pacific Ocean. On Monday, 9/04 U.S. Ambassador to the UN, Nikki Haley said “the time has come to exhaust all diplomatic means to end this crisis. Only the strongest sanctions will enable us to solve this problem through diplomacy.” Monday 8/31 began joint U.S. & S. Korean military exercise the world’s largest computerized command control implementation that involved over 80,000 U.S. and South Korean troops. CIA Director Mike Pompeo cites U.S./NOKO tensions have subsided saying “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Rhetoric reached height on Friday 8/11 w/ Trump saying “U.S. military solutions are in place, locked and loaded” matching his earlier statement that “North Korea best not make any more threats to the United States or they will be met with fire and fury like the world has never seen.” On Th. 8/10 NOKO announced its plan to “pre-emptively strike on Guam in mid-August.” Trump’s reaction, “Maybe my ‘fire and fury threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location on the U.S. continent. NOKO may use nuclear technology as barter for food with ”suspect” nations. U.S. sanctions of select Chinese banks to pressure PRC to influence NOKO has failed. China insiders say PRC does not have influence with NOKO that the U.S. thinks it does. China in precarious position given South China Sea Islands. Asian allies justified to build out their respective militaries.

ELEVATEDBREXIT Fallout

· Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. Many geopolitical strategists point to the India/Pakistani

border conflict as one of if not the most volatile. Both are nuclear capable. The 100-year old non-partisan Brookings Institute calls Pakistan “the world’s most dangerous country.”

· EU and Macron-Merkel coalition to squeeze U.K. for all it can re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU. UK withdrawal from EU takes place in March, 2019.

CAUTION“U.S. political gridlock”

· Trump tax reform targeted for this year. Infrastructure reform challenges & consensus GOP support to pass legislation still in doubt after repeal and replace defeat in late July. Trump’s Strategic and Policy Forum disbanded as did his Manufacturing Council. Tense U.S. political environment.

· Increased chance of 2018 U.S. recession; “maybe” one more rate hike in 2017; recent absence of inflation and $4.5 trillion balance sheet unwind are concerns.

Syndicate IG Corporate-only Volume Estimates For This Week and September

IG Corporate New Issuance

This Week
9/11-9/15

vs. Current
WTD – $19.175b

September 2017

vs. Current
WTD – $67.415b

Low-End Avg.

$31.71b

60.47%

N/A

N/A

Midpoint Avg.

$32.75b

58.55%

$112.45b

59.95%

High-End Avg.

$33.79b

56.75%

N/A

N/A

The Low

$25b

76.70%

$100b

67.415%

The High

$40b

47.94%

$125b

53.93%

A Special Message from the EEI about Hurricane Irma

In light of the recent catastrophic hurricanes Harvey and Irma that slammed Texas and Florida among other states and with damage costs estimated as high as between $150b-$200b I wanted to share an article with you all that came to me from the Edison Electric Institute (EEI). It’s informative and in many ways perhaps the best source from which to receive a power/electric damage assessment from and certainly to comprehend the immensity of what EEI and the power companies are facing. It should also serve as reassurance that they are in fact truly doing everything they can to power you all back up. We here at Mischler are acutely aware of what our friends (issuers, accounts, family and friends) have gone through and will be facing in the coming weeks and in some cases months. We appreciate what you’re experiencing and would like to thank the EEI and particularly Brian Reil at EEI Media Relations for the quick permission approval process to re-print the below article for all of you. There are some embedded links in the piece that may also be very helpful and informative to you.

The Edison Electric Institute is the association that represents every U.S. investor-owned electric company. EEI’s members provide electricity for about 220 million Americans, and operate in all 50 states and the District of Columbia. As a whole, the electric power industry supports more than 7 million jobs in communities across the United States. In addition to its U.S. members, EEI has more than 60 international electric companies with operations in more than 90 countries, as International Members, and hundreds of industry suppliers and related organizations as Associate Members.

Organized in 1933, EEI provides public policy leadership, strategic business intelligence, and essential conferences and forums.

Hurricane Irma: More Than 50,000 Workers From Across the U.S. and Canada Dedicated to Power Restoration Efforts

WASHINGTON (September 11, 2017) – As of 7 p.m. EDT, more than 7.1 million customers are without power across Florida and in parts of Alabama, Georgia, and South Carolina as a result of Hurricane Irma. As the storm moved through the region, companies were able to address more than 1.25 million outages, thanks largely to recent investments in energy grid technology and automation. Irma was downgraded to a tropical storm earlier today.

“This is likely to be one of the largest and most complex power restoration efforts in U.S. history,” said EEI President Tom Kuhn. “An army of more than 50,000 workers from across the United States and Canada is now dedicated to supporting the industry’s Irma restoration efforts. This includes workers from affected companies, as well as mutual assistance crews, contractors, and other support personnel. Mutual assistance is a hallmark of our industry and serves as an effective—and critical—restoration resource for electric companies.”

Given the size and strength of Irma, infrastructure systems will need to be rebuilt completely in some places of Florida before power can be restored. This will delay restoration times, and customers should be prepared for the possibility of extended power outages.

“We know that being without electricity creates hardships, and we greatly appreciate customers’ patience as electric companies work day and night to assess damage and to restore power where and when conditions are safe to do so,” said Kuhn. “Companies will continue their storm restoration efforts around the clock until the last customer who can receive power is restored.”

Responding to major events like Irma requires significant coordination among the public and private sectors, and strong industry-government coordination is critical. As we did throughout Hurricane Harvey, EEI and the electric power industry are working through the Electricity Subsector Coordinating Council (ESCC) to coordinate with the federal government, other segments of the industry, and critical infrastructure operators.

For the fourth consecutive day, Energy Secretary Rick Perry joined an ESCC call with the CEOs of companies impacted by Irma to identify issues that will expedite power restoration. “We commend Secretary Perry’s ongoing leadership and the commitment of the entire Administration to ensure unity of effort in the Irma response,” said Kuhn.

Ensuring the safety of customers, communities, and workers is the electric power industry’s highest priority. As always, customers should stay away from downed power lines and always treat fallen wires and anything touching them as though they are energized. Customers using generators should plug appliances directly into the generator and follow all safety warnings.

What’s Next?! Despite North Korea bomb-rattling, Hurricane’s Harvey and Irma natural play to stimulate infrastructure spending, and a host of global event risk factors, there was some good news today from of all places “Dysfunction Junction” a.k.a. The Beltway….Washington, D.C. Despite GOP push back from House Speaker Paul Ryan, Washington Wackiness got even more wacky when President Trump crossed the aisle to join arms with the Democratic caucus and pledged to extend our nation’s debt limit to three months to December 15th. The GOP hasn’t shown much support for the president anyway, so what the heck, right? WAKE UP GOP! Equally important was the $7.4b disaster relief bill passed by an overwhelming 419-3 vote to assist all those Gulf Coast families and businesses impacted by Hurricane Harvey. Only when our fellow Americans and businesses are beaten, battered and bruised, do our nation’s politicians do the right and obvious thing. Wouldn’t it be great if they came together for us and our great nation every time? We’re their bosses, folks. They are supposed to work for us. We tell them what to do. If they don’t deliver then they’re not doing their jobs.

The Carlyle Group LP increased today’s $25 par Series “A” PerpNC5 Preferred to $400mm from $150mm.

Visa Inc. upsized today’s three-part 5s/10/s/30s Senior Global Notes new issue to $2.5b from $2b at the launch and at the tightest side of guidance.

Sinopec Group Overseas Development added a 30-year tranche to today’s 3-, 5- and 10-year transaction at guidance.

The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 22 IG Corporate-only new issues, that illustrated price evolution, was <16.76> bps. This includes today’s Carlyle Group Preferred and does not include the Sinopec 30-year tranche that was an add-on at guidance.

NOKO’s Kim Jong-Un explodes 100 kiloton hydrogen bomb 5-times more powerful than that dropped on Nagasaki; causes 6.3 magnitude earthquake according to the U.S. Geological Survey after last week’s ICBM launch over Japan lands in Pacific Ocean. Head of IAEA (Int’l. Atomic Energy Authority) calls NOKO’s recent hydrogen bomb test a “new dimension of global threat” to the world. U.S. Ambassador to the UN, Nikki Haley spoke today saying “the time has come to exhaust all diplomatic means to end this crisis. Only the strongest sanctions will enable us to solve this problem through diplomacy.” Monday 8/31 began joint U.S. & S. Korean military exercise the world’s largest computerized command control implementation that involved over 80,000 U.S. and South Korean troops. CIA Director Mike Pompeo cites U.S./NOKO tensions have subsided saying “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Rhetoric reached height on Friday 8/11 w/ Trump saying “U.S. military solutions are in place, locked and loaded” matching his earlier statement that “North Korea best not make any more threats to the United States or they will be met with fire and fury like the world has never seen.” Russia’s Foreign Minister Lavrov says his country “does not want to see North Korea with nuclear weapons.” On Th. 8/10 NOKO announced its plan to “pre-emptively strike on Guam in mid-August.” Trump’s reaction, “Maybe my ‘fire and fury threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location on the U.S. continent. UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population). NOKO may use nuclear intel/systems as barter for food w/”suspect” nations. U.S. has already sanctioned certain Chinese banks to pressure the PRC to use more influence over NOKO which has failed. China insiders say PRC does not have the influence with NOKO that the U.S. thinks it does. U.S.’s NOKO strategy quickly changing from containment on the Korean peninsula to defending the Hawaii, Alaska and the continental United States and more offensive in nature. NOKO adding miniature nuclear warheads to its ICBMs. Asian allies now justified to build up militaries including Japan. China in precarious position given South China Sea Islands.

ELEVATEDBREXIT Fallout

Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. Many geopolitical strategists point to the India/Pakistani border conflict as one of if not the most volatile. Both are nuclear capable. The 100-year old non-partisan Brookings Institute calls Pakistan “the world’s most dangerous country.”

EU and Macron-Merkel coalition to squeeze U.K. for all it can re: BREXIT “divorce” bill. Companies prepping for hard BREXIT & 2 years of weak growth. PM May wants rolling series of meetings with EU. UK withdrawal from EU takes place in March, 2019.

CAUTION“U.S. political gridlock”

Trump tax reform targeted for this year according to Gary Cohn, Director of the NEC. Infrastructure reform challenges & consensus GOP support to pass legislation still in doubt after repeal and replace defeat in late July. Trump’s Strategic and Policy Forum disbanded as did his Manufacturing Council.

“We here in America, hold in our hands the hope of the world, the fate of the coming years; and shame and disgrace will be ours if in our eyes the light of high resolve is dimmed, if we trail in the dust the golden hopes of men.” -Theodore Roosevelt

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC provides objective debt capital market and investment corporate debt commentary and geo-political analysis, it is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our investment grade fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline.

**HIGH RISK EVENT ADDITION** – Members of Trump’s Strategic and Policy Forum have made a joint decision to disband the group. Trump agreed to disband his Manufacturing Council as a result. When an event negatively impacts a company’s public perception it is “game over.” Corporate America’s business leaders are now abandoning Trump. This in response to the President’s replies to the riot that took place in Charlottesville, VA. over the weekend in which one person was killed and dozens injured. Without corporate support, GOP will not coalesce to promote Trump’s agenda.

Monday 8/31 begins joint U.S. & S. Korean military exercises. It is the world’s largest computerized command control implementation and will involve over 80,000 U.S. and South Korean troops.
CIA Director Mike Pompeo cites U.S./NOKO tensions have subsided saying “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Rhetoric reached height on Friday 8/11 w/ Trump saying “U.S. military solutions are in place, locked and loaded” matching his earlier statement this week that “North Korea best not make any more threats to the United States or they will be met with fire and fury like the world has never seen.” Russia’s Foreign Minister Lavrov says his country “does not want to see North Korea with nuclear weapons.” On Th. 8/10 NOKO announced its plan to “pre-emptively strike on Guam in mid-August.” Trump’s reaction, “Maybe my ‘fire and fury threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location on the U.S. continent. UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population). NOKO may use nuclear intel/systems as barter for food w/”suspect” nations. U.S. has already sanctioned certain Chinese banks to pressure the PRC to use more influence over NOKO which has failed. China insiders say PRC does not have the influence with NOKO that the U.S. thinks it does. U.S.’s NOKO strategy quickly changing from containment on the Korean peninsula to defending the Hawaii, Alaska and the continental United States and more offensive in nature. NOKO adding miniature nuclear warheads to its ICBMs. Asian allies now justified to build up militaries. China in precarious position given South China Sea Islands.

ELEVATEDBREXIT Fallout

Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. Many geopolitical strategists point to the India/Pakistani border conflict as one of if not the most volatile. Both are nuclear capable.

U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent. Companies prepping for hard BREXIT & 2 years of weak growth.

CAUTION“U.S. political gridlock”

Trump financial, tax and infrastructure reform challenges & consensus GOP support to pass legislation in doubt after repeal and replace defeat. Dems revamping & revising their message.Mueller expanding FBI probe into Trump. Congress and Senate back in session on Tuesday, September 5th following August recess. Increasingly tense political environment.

On June 15th U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Iran launches missile into space in response on 7/28. U.S. levies additional sanctions on Iran in response to launch.

Increased chance of 2018 U.S. recession; “maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns. Market expecting unwind announcement by Fed in September.

Syndicate IG Corporate-only Volume Estimates This Week and August

IG Corporate New Issuance

This Week
8/14-8/18

vs. Current
WTD – $28.85b

August 2017

vs. Current
MTD – $93.425b

Low-End Avg.

$26.17b

110.24%

$78.37b

119.21%

Midpoint Avg.

$26.90b

107.25%

$79.10b

118.11%

High-End Avg.

$27.62b

104.45%

$79.83b

117.03%

The Low

$15b

192.33%

$60b

155.71%

The High

$40b

72.125%

$100b

93.425%

CEOs Hold the Trump Card – “QC” Commentary

“We here in America, hold in our hands the hope of the world, the fate of the coming years; and shame and disgrace will be ours if in our eyes the light of high resolve is dimmed, if we trail in the dust the golden hopes of men.”-Theodore Roosevelt

Today, the White House Strategic and Policy Forum disbanded. Blackstone Group CEO Steven Schwarzman played point for the high powered Forum that has suffered from the resignations of numerous participating CEOs in light of Trump’s recent statements concerning the Charlottesville incident. Schwarzman, representing the Forum issued the following statement [which Trump since disputed]:

“We believe the debate over Forum participation has become a distraction from our well-intentioned and sincere desire to aid vital policy discussions on how to improve the lives of everyday Americans. As such, the President and we are disbanding the Forum.”

With a sub 40% Presidential approval rating and the abandonment by his fellow Corporate America CEO base, Trump is in hot water. He will now lose additional and desperately needed support from the GOP in both the House and Senate to achieve any of his agenda and campaign promises. Politicians are fickle. Having lost the recent Repeal and Replace vote by one, this latest debacle is a tell-tale sign of things to come. It came swiftly and with the support of Corporate America’s finest leaders. Corporations have long histories and took decades to get to where they are. They have a fiduciary responsibility to their shareholders and diverse customer base to keep their companies operating smoothly and efficiently. Any disruption to that is unacceptable.

Today was not about EPS or EBITDA. Rather, it was about American morals, ethics and values that are and should always be the foundation of the world’s most diverse society and are reflective of the customers who, in turn are the reason businesses exist. Whether one has an account at J.P. Morgan or drives a Ford, or shops at Walmart or turns on and off the light switches in Chicago as a Commonwealth Edison customer, the engine that drives the companies of the greatest nation on our planet are its people. As the top dog, President Trump hopefully learned an important lesson today. I believe he meant well, but it certainly didn’t come out that way and we now officially have a Presidency in crisis.

You often read here in the “QC” about Corporate America’s Diversity and Inclusion initiatives. It’s a story I am always proud to tell when we are on an issuer’s new issue transactions. I work here at our great nation’s oldest Service Disabled Veteran broker-dealer whose certification falls under the umbrella of diversity and inclusion. The fact remains that Corporate America has spoken today from its top leadership. As I always recount here, great companies and great initiatives start from the “top down.” That IS leadership. They led today.

I will also, however, add that those who opposed Trump from the get go are most assuredly happy about this latest chapter in Trump’s controversial seven month old Presidency. The media, to be fair folks, has quite frankly been relentlessly, ruthlessly and consistently focused on pinning Trump into a corner to elicit a reaction. Well, they got the reaction they wanted these past several days when Trump went off the reservation in his inimitable way, which was subsequently manifested in the disbanding of the Forum and Manufacturing Council. Rookie mistake perhaps, but when one is the President, there is no such thing as a rookie mistake.

From the onset I have always said that Trump’s election will either serve as a wake-up call to Washington political dysfunction to teach both parties that they are on watch to cross the aisle to get things done OR Trump will succeed and turn the Washington establishment on its head and usher in a new populist leadership. It appears today that the former should be everyone’s main focus in our wounded nation amidst a host of very dangerous global event risk events all playing out at the same time. Corporate America, however, and as always, looks very good and highly responsible, which may be the reason why the stock market has held in throughout today’s session.

When America is on the same page NOTHING can stop it.

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Syndicate IG Corporate-only Volume Estimates for the Remainder of August & September(more…)

Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, the QC provides objective debt capital market and investment corporate debt commentary and geo-political analysis, it is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our investment grade fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline.

Investment Grade Corporate Debt New Issue Re-Cap – A View About Charlottesville and the Aftermath

Risk was clearly back on in the financial markets today, as U.S./NOKO tensions fell to the wayside. Unfortunately prejudice and racism reared their ugly heads in the Charlottesville, Virginia riot over the weekend. On Monday, Fortune 500 thought leaders Ken Frazier, CEO of Merck & C0., Brian Krzanich, CEO of Intel, and Kevin Plank, CEO of Under Armour each took a stand by protesting the ‘equivocal’ comments made by President Trump in his first response to the domestic terrorism acts in Charlottesville, which were advanced by self-proclaimed alt-right and white supremacist neo-Nazis. Mischler Financial Group stands with every corporate executive (and every duly-elected or duly-appointed government official) who stays true to genuinely right-minded beliefs and applauds their respective organization’s dedication to doing right by doing good. In case you missed the memo, many of America’s Fortune corporations adhere to this same notion and advance their commitment via proactive Diversity & Inclusion initiatives. For those corporate executives who may have spent all of their undergrad time in finance and accounting classes, and for those who are perhaps not as familiar as they could be i.e. American History (let’s not forget to mention world history, too!), racism and bigotry are diseases that spew hatefulness and cannot be allowed in a free and democratic society. The incendiary and incite-full actions for which the various white supremacist and KKK groups are notorious for are NOT protected “First Amendment rights.* They are cancers that cannot be discounted or condoned via equivocal platitudes; simple right-mindedness demands they be eradicated.

To the above point, one only need to re-read the Constitution and the Bill of Rights to appreciate that D&I is part and parcel to our country’s DNA. It is also part of the cultural foundation of many Fortune 500 corporations, including Intel, including Merck, including Under Armour and including many others! D&I means respect for and appreciation of differences in ethnicity, gender, age, national origin, disability, sexual orientation, education, and religion. But it’s more than this. We all bring with us diverse perspectives, work experiences, life styles and cultures and we presumably all share a disdain for anyone and any group that attempts to dismantle, disrupt and or destroy. Kudos to Mssrs. Frazier, Krzanich and Plank for putting themselves in harm’s way and risk of “injury by Twitter” for being true leaders and staying true to their convictions and their constituents.

Kudos also to the many Fortune executives who have raised their own voices to advocate on behalf of right mindedness, and to those corporate executives such as Jamie Dimon, CEO of Citigroup, who have opted not to resign their volunteer roles serving on “Presidential Councils” in protest to seemingly wrong-headed rhetoric. One can hope they have chosen to remain in their roles so that they can be that much more proactive in their WH-appointed “l” roles and/or similar presidential councils in which they serve as volunteers. These are jobs these business leaders have [presumably] accepted to better the country, not to help advance any political platform or political agenda. How the US Secretary of the Treasury or the Director of the National Economic Council decide how to square the so-called ‘equivocal’ views expressed by the CEO-In-Chief vs. their own cultural beliefs will likely be subject to ongoing self-reflection, external speculation and spirited debate. These are smart folks and optimism demands these administration officials be given the benefit of the doubt, just as it is incumbent on any/every corporate leader to serve as role models for employees, customers and clients; just as right-minded parents do for their own children.

Today’s VIX closed 3 bps tighter versus Friday’s close. Also a reminder that tomorrow is August 15th – “mid-August” – that’s when North Korea’s illustrious “bad boy” proclaimed that he’d have his master plan ready to bomb Guam developed by. One week from today on Monday, August 21st begin joint U.S-South Korean military exercises referred to as Ulchi-Freedom Guardian. The exercise began in our Bicentennial year of 1976. North Korea has annually perceived the joint exercise as “preparation for war.” It is the world’s largest computerized command control implementation. Up to 80,000 American and South Korean troops have participated in this exercise in the recent past. The game will go on for two weeks before concluding on Thursday August 31st. Enjoy the show Mr. Jong-Un. You’ll have front row seats though I recommend binoculars. Here’s lookin’ at you kid!

If you ask me, this is the perfect time for corporations to issue bonds. Not a bad thing will really happen, risk is back on and summer vacations are quickly approaching. My prediction – expect Amazon to the hit the tapes first thing tomorrow morning. Free market enterprise at work. Ya gotta love it!

Manufacturers & Traders Trust Co. dropped the 3-year FRN tranche from today’s announced 3-part electing 3- and 10-year fixed rate tranches at the launch and with both coming at the tightest side of guidance.

The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 6 IG Corporate-only new issues, was <14.58> bps.

The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 7 IG Corporate new issues, including the Arch Capital Group Ltd. $25 par Preferred was <13.21> bps.

Investment grade corporate bond trading posted a final Trace count of $11.4b on Friday versus $13.2b on Thursday and $14.2b the previous Friday.

The 10-DMA stands at $16.1b.

The “QC” Geopolitical Risk Monitor

Risk Level/Main Factor

Geopolitical Risks

HIGHNorth Korea

· CIA Director Mike Pompeo cites U.S./NOKO tensions have subsided saying “We’re not closer to war than a week ago, but we are closer than we were a decade ago.” Rhetoric reached height on Friday 8/11 w/ Trump saying “U.S. military solutions are in place, locked and loaded” matching his earlier bluster this week that “North Korea best not make any more threats to the United States or they will be met with fire and fury like the world has never seen.” Russia’s Foreign Minister Lavrov says his country “does not want to see North Korea with nuclear weapons.” On Th. 8/10 NOKO announced its plan to “pre-emptively strike on Guam in mid-August.” Trump’s reaction, “Maybe my ‘fire and fury threats weren’t strong enough!” N. Korea launched an ICBM on 7/28. NOKO’s Hwasong-14 missile can reach any location on the U.S. continent. UN projects worst famine in NOKO in 17 yrs; last one killed 2mm (8% of population). NOKO may use nuclear intel/systems as barter for food w/”suspect” nations. U.S. has already sanctioned certain Chinese banks to pressure the PRC to use more influence over NOKO which has failed. China insiders say PRC does not have the influence with NOKO that the U.S. thinks it does. U.S.’s NOKO strategy quickly changing from containment on the Korean peninsula to defending the Hawaii, Alaska and the continental United States and more offensive in nature. NOKO adding miniature nuclear warheads to its ICBMs. Asian allies now justified to build up militaries. China in precarious position given South China Sea Islands.

ELEVATEDBREXIT Fallout

Pakistani Prime Minister Nawaz Sharif was ousted for his role in a corruption scandal. He selected his brother Shahbaz to take over. Many geopolitical strategists point to the India/Pakistani border conflict as one of if not the most volatile. Both are nuclear capable.

·U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. France pressing for $115b equivalent. Companies prepping for hard BREXIT & 2 years of weak growth.

CAUTION“U.S. political gridlock”

· Trump financial, tax and infrastructure reform challenges & consensus GOP support to pass legislation in doubt after repeal and replace defeat. Dems revamping & revising their message.Mueller expanding FBI probe into Trump. Congress and Senate back in session on Tuesday, September 5th following August recess. Increasingly tense political environment.

· On June 15th U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Iran launches missile into space in response on 7/28. U.S. levies additional sanctions on Iran in response to launch.

· Venezuela – civil unrest continues against Maduro dictatorship. U.S. Tsy freezes Maduro family assets. Trump, who campaigned on non-intervention platform now says he is considering more than mere sanctions and “won’t rule out military option.” Risk of VZ default. 4th largest exporter of oil to U.S. behind Canada (#1), Saudi Arabia (#2) & Mexico (#3).